Sec. 3. Debt-free college grant program for HBCUs and MSIs
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Part F of title III of the Higher Education Act of 1965 ( 20 U.S.C. 1067q et seq. ) is amended by adding at the end the following: In this section, except as provided in paragraph (2), the term eligible institution means an institution of higher education that is— a private, nonprofit 2-year or 4-year part B institution (as defined in section 322); a Tribal College or University (as defined in section 316); or a private, nonprofit 2-year or 4-year institution— that is— a Hispanic-serving institution (as defined in section 502); an Alaska Native-serving institution (as defined in section 317(b)); a Native Hawaiian-serving institution (as defined in section 317(b)); a Predominantly Black Institution (as defined in section 318); an Asian American and Native American Pacific Islander-serving institution (as defined in section 320(b)); or a Native American-serving, nontribal institution (as defined in section 319); and in which not less than 35 percent of the students enrolled at the institution are eligible to receive a Federal Pell Grant.
Notwithstanding paragraph (1), an institution of higher education is not an eligible institution if the institution was a for-profit institution of higher education that converted to a nonprofit institution of higher education and less than 25 years have passed since the date of such conversion. The Secretary shall award grants to eligible institutions to enable the institutions to provide need-based financial aid to cover unmet need for students enrolled at the institutions.
Grants awarded under this section shall be for a period of 5 years. An eligible institution that desires a grant under this section shall submit an application to the Secretary at such time, in such manner, and accompanied by such information as the Secretary may require, including a plan detailing how— the eligible institution will use grant funds to provide debt-free college to the students enrolled at the institution; and the institution plans to meet the requirements of the grant program.
A grant amount awarded to an eligible institution under this section for a year— shall be in an amount equal to the amount of the institution's expenditures on student undergraduate instruction and academic support for the year; and shall not be disbursed for the year until the Partnership Office created under section 499A–4(a) reviews and approves the annual update submitted by the institution pursuant to subsection (f). If the amount appropriated to carry out this section for a fiscal year is insufficient to award each eligible institution the institution's full grant amount pursuant to subparagraph (A), the Secretary shall establish procedures for ratably reducing each institution's award amount for such fiscal year.
Subject to subparagraph (B), if the percentage of students eligible to receive a Federal Pell Grant who are enrolled at an eligible institution that receives a grant under this section decreases to less than 35 percent after the first year of the grant award, such institution may apply to the Secretary for a waiver of the requirement that an institution to be eligible to receive a grant under this section have not less than 35 percent of the students enrolled at the institution eligible to receive a Federal Pell Grant.
The Secretary shall grant a waiver under subparagraph (A)— only if the decrease in percentage is— small relative to the size of the student body; or the result of unexpected or uncontrollable circumstances; and not more than 2 times during the 5-year grant period. An eligible institution that receives a grant under this section shall use the grant funds as follows: 95 percent of the grant funds shall be— used to cover the unmet need for financial assistance to attend the institution of students who have not yet earned a bachelor’s degree; and disbursed according to financial need. 5 percent of the grant funds shall be used for the following activities:
Increasing capacity through construction or renovation of facilities. Hiring faculty. Student support services. Other activities to increase enrollment of low-income and underserved students, improve student outcomes, and provide information to prospective students and families, and other activities as approved by the Secretary to improve access, affordability, or quality of the education provided by the institution. An eligible institution that receives a grant under this section may not use grant funds for endowments or the construction of athletic or commercial venues.
An eligible institution that receives a grant under this section shall submit to the Secretary an annual update— with any changes to the institution's expenditures on student instruction and academic support; and on how the institution is fulfilling the terms of the grant. An eligible institution that receives a grant under this section shall carry out the following: Cap tuition and fees at the institution at the level as of the date of enactment of the Debt-Free College Act of 2023 , with a yearly increase allowed based on the Consumer Price Index (as determined by the Secretary).
Maintain expenditures on instruction and academic support at the institution at a level that is not less than the average of such expenditures at the institution over the period of 3 years preceding the date of enactment of the Debt-Free College Act of 2023 . Maintain the enrollment of low-income students, as defined by the Secretary, at the institution at a level that is not less than the level of such enrollment as of the date of enactment of the Debt-Free College Act of 2023 .
Maintain institutional aid at a level that is not less than the average of such aid over the period of 3 years preceding the date of enactment of the Debt-Free College Act of 2023 . Submit to the Secretary for approval the institution’s calculation of the cost of attendance at such institution. Clearly communicate to prospective students and their families the following: How students can attend the institution without debt. That a debt-free college education provided pursuant to this section is conditioned upon institutional eligibility and participation under this section and may not apply for each year that the student is enrolled at the institution.
If an eligible institution that receives a grant under this section breaches a term of the grant, the Partnership Office created under section 499A–4(a) shall notify the institution and provide the institution with an opportunity to correct the record or cure the breach not later than 30 days after the date of the notification. The Partnership Office created under section 499A–4(a) shall, after considering the eligible institution's response to a notification under subparagraph
(A)or lack of response, make a recommendation to the Secretary that the Secretary— take no action with respect to the eligible institution; place the eligible institution on probation; or revoke the eligible institution’s eligibility for the grant program under this section. An eligible institution that is placed on probation by the Secretary shall develop a plan to remedy the breach of the term of the grant. If the eligible institution does not remedy the breach, the Secretary may levy a fine against the institution of an amount not to exceed 1 percent of the annual grant amount. If an eligible institution's eligibility for the grant program under this section has been revoked by the Secretary, such institution shall— place into escrow any unexpended grant funds described in subsection (e)(1)(A) to be disbursed directly to students enrolled at the institution; return to the Secretary any unexpended funds described in subsection (e)(1)(B); remain ineligible to receive a grant under this section during the 3-year period after the date eligibility was revoked; and notify prospective and enrolled students at the institution and their families of such ineligibility for participation in the grant program under this section. An eligible institution that receives a grant under this section that intends to withdraw from the grant program under this section shall— notify the Partnership Office created under section 499A–4(a) not less than 60 days prior to the withdrawal; place into escrow any unexpended grant funds to be disbursed directly to students enrolled at the institution; and notify prospective and enrolled students at the institution and their families of such withdrawal. There are authorized to be appropriated to carry out this section— $3,000,000,000 for fiscal year 2024; and such sums as may be necessary for each of fiscal years 2024 through 2033. Funds made available under paragraph
(1)shall be available for obligation through September 30 of the fiscal year succeeding the fiscal year for which such sums were appropriated. .
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Sec. 3
Debt-free college grant program for HBCUs and MSIs
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